.uti - ... \. ." ",, ,,: '- JJ .........I. ..,"'... .. ---I &,; ' ; __h .'-.. J '- '!!I."" '.( to \ -.:m ,c.. \ ,0 V \y trj.V(- I, I,,-,, r 1 I t '5"1 '" ,....' ,' / , 11.1 . I 11 ' 82 money. I.ve got a boy fifteen years old. I've spent thirty-eight years in a hotel room. I wouldn't wish that on my worst enemy, much less my son." Clark Ellison mentioned a rumor that Cliff Culpepper wanted to drill some Red Fork wells-ten-thousand- to-twelve-thousand-foot tests-in the Anadarko Basin. "We'd still do busi- ness with him," Appleby said. "If we could get a contract drawn up that pleased Clark and me, we'd both sign it. And Cliff'll sign anything. I could get him to sign today's newspaper." That meant, in other words, that Ellison and Appleby had not made a mistake when they asked Cliff Culpep- per to operate the Tomcat? "Hell, no," Buddy Appleby said. "That blowout made people pay atten- tion to the Fort Cobb. Nine offsets got drilled, we got carried free in every one, and they're all producers, all ex- cept one. The Tomcat gave us credi- bility. As far as we're concerned, Cliff Culpepper made us." E VENTUALLY, the Justice De- partment became committed to the proposition that, mainly, the Penn Square Bank failure and its attendant misery were Bill Patterson's fault. The government even went as far as to suggest that Bill Patterson had a wormy, corrupt soul. For more than two years, lawyers on the staff of the United States Attorney for the West- ern District of Oklahoma talked to Penn Square's former employees and customers and victims, to the F.D .1. C. and the F.B.I. and the I.R.S., and to grand Jurors. On the first anniversa- ry of the bank failure, the F.D.I.C. announced that its investigation had uncovered three hundred and forty pos- sible criminal violations. Six months later, this number had risen to four hundred and fifty-one. Another six months passed, and a federal grand jury in Oklahoma City indicted Pat- terson on thirty-four counts. Friends and associates of Patterson, heedless of what the feds insisted, be- lieved almost unanimously that even if he had violated a few hundred banking laws he would never have done so for personal gain. One line of defense had it that Patterson was perhaps crazy and, if so, probably dumb-crazy. "Smart-crazy is I steal three million dollars and I hide it real well," a friend of mine explained. "While I might go to jail for a couple of years, when I get out the money'll still be there. Dumb-crazy is if you have to go to jail and you've got nothing to show for it. Dumb-crazy is when you do it for the thrill-to be a big shot." Even if loans were kited, notes altered, bad credits sprinkled with monkey dust to make them shine like triple- A -rated debentures, what did that imply about motives and inten- tions? That Patterson was a criminal mastermind? Might it not imply that Bill Patterson was average? He had an instinct for salesmanship, of course, and evidently there were odd creases in his gray matter. But didn't his case above an illustrate the colorful conse- quences of a man with no remarkable talent getting in over his head to a remarkable extent? Averageness was a trait that Patterson's lawyers intended to emphasize to the jury. Crazy, dumb or smart, is a matter of context. By the time Patterson was indicted, in the summer of 1984, the Penn Square Bank failure had become the costliest in United States history. The upstream banks had charged off more than half of their Penn Square loans-more than a billion dollars' worth. Of the loans that had not yet been declared losses, the majority were nonperforming. Penn Square's share- holders, of course, had lost their entire thirty-seven-million-dollar stake the day the bank closed. The F.D.I.C., in assumIng liabilities that dwarfed the bank's assets, stood to lose a hundred and twenty-five million dol- lars in the course of the liquidation. The claims from uninsured depositors and from general creditors would ap- proach a quarter of a billion dollars. Not to be overlooked but most difficult to quantify were the costs of the failure to a numberless constituency of innocents who never saw the bank or seJ foot inside it, who never lent or borrowed a dime. When Penn Square evaporated as a credit source, the cus- tomers who were unable to arrange financing elsewhere not only went broke but also took with them these innocents-small, unsteady dominoes way down the line-who ended up losing their solvency or their jobs or, at the very least, their hopeful assump- tions. When the F.D.I.C. (and then the Department of Justice and then Congress and then the Department of the Treasury) descended on Penn Square to inspect the wreckage and appraise the damage, the impulse to lay blame at a distant doorstep was universal. Time passed, and the conse- MAY 6, 1985 quences of Penn Square resonated- louder, broader. In a Just and proud society, someone should have to an- swer and pay for the mess. The con- text expanded; the mess gained ampli- tude. Did the contributions of a Bill Patterson or a Bill Jennings grow or diminish? What would a jury of Okla- homans think? The federal investigation was a cu- rious tease. Every few months, word would leak that indictments would be returned "next month." Then-noth- ing. For almost two years, nothing. A brief stir occurred in January of 1984, when Thomas Orr, a Penn Square vice-president, pleaded guilty to one count of tax evasion and one count of conspiracy to commit bank fraud. Orr was the commercial-loan officer who lent money to horse breeders and brokered horses at the same time. His weakness was the bread-and-butter kickback. Some of Orr's customers made Bill Patterson's new oilies look like the editorial board of the H ar- vard Business Review. William Price, the United States Attorney, told the press that the Orr pleas constituted a major development, and that the gov- ernment would crack the whole case open any minute. But the Orr matter was in fact an irrelevant holding ac- tion. In the spring of 1981, more than a year before the failure, Orr had left Penn Square. Whatever his sins, they had had almost nothing to do with the closing of the bank. Later, Price of- fered a bold explanation of what was taking so long. Penn Square, he said, was "the most complicated banking case in history." He went on, "If you polled every prosecutor in Amer- ica, I think you'd find that this is the toughest case in the country right now to prosecute." Patterson, meanwhile, remained hard to reach during business hours I remember hearing that one day when Patterson had been working at the Penn Square Bank just a few months an officer in the installment-lending department invited him to lunch. Af- terward, as they walked through the shopping mall back to the bank, Pat- terson asked his colleague whether he knew anything about the lawn-service business. Were any of his customers in that line of work? Yes, the installment lender said, he had a couple of custom- ers who did that, and they seemed to make out pretty well. Patterson said, "You know, I'm kind of thinking of doing that myself on the weekends." The remark puzzled the other fellow: Why would a bank officer want to do